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V2354-17 15 September 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · estimación directa

Supplies rebilled by a City Council may be deductible for Personal Income Tax under the direct estimation regime if the correlation principle is met

A taxpayer operating a café has enquired whether gas and electricity bills rebilled by the City Council are deductible for Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) states that deductibility depends on proving a correlation with income and meeting documentary justification requirements.

The question raised

1st.- Whether the amount of the receipts issued by the City Council to the taxpayer constitutes deductible expenses for Personal Income Tax (IRPF) purposes.

The DGT's ruling

For the direct estimation regime, the deductibility of expenses is conditional upon the principle of correlation with income and the proof that they were incurred in the course of the activity. The verification of said correlation is a matter of fact that falls under the jurisdiction of the inspection. Furthermore, the expense must be justified by an original or simplified invoice and recorded in the mandatory books.

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